Small-Scale Mining: An Entrepreneurial Approach

Gorom district is situated 50 Km Southeast of Juba in Luri region, which contains the highest concentration of alluvial gold occurrences in the area and has a history of artisanal gold mining.

Three companies were granted small-scale mining license of 1 Km 2 in the area and commenced work by late 2017. By mid 2018, two companies held operation and by late 2019 the third company officially ceased operation in the area on the ground of low gold recovery, and high operation cost.

It was clear the plan has failed to attain the projected operating profit margin, return on equity and revenue for the country.

There are various factors and variables that were not taken into consideration while assessing the viability of this project, which led to the failure of the small-scale gold mining operations in Gorom district. It can be summed up as follow:

Inefficient management. Insufficient exploration and feasibility study. Inadequate f Unsuitable mining technique and equipment. Ineffective government role. The management adapted an aggressive approach during the process of planning, organizing, directing, controlling and coordination of human and financial resources to deliver fast result. They recruited many multi-skill personnel to manage its operation instead of a few, and hired individuals with special skills full-time instead of retaining them on a need basis. They should’ve maintained a lean organization with flat structure which consist of: top management (manager), lower management (site supervisor) and workers (operating personnel).

As well as small responsive team of personnel with a team approach to task achievement and use computer applications to automate the rest of the tasks.

Inefficient exploration and Feasibility Study Exploration is the most important and basic concept in the entire process of mining. Feasibility study and later stages of development depend heavily on the results of prospecting and exploration. Without accurate data and reliable geological information, proof of mineral occurrences and economic viability of projects is difficult and quite often, misleading.

Exploration consist of two stages; prospecting and exploration.

Prospecting start with the selection of a broad area for reconnaissance works, and explore the geological environment to characterize and evaluate the target areas. If the result is positive, it can lead to land acquisition.

Exploration is subjecting the target areas to series of geophysical, geological and geochemical testing to define the identity of host rock, alteration and mineralization. The success of this process results in the discovery of viable mineral as fig-1 shows.

Prior to construction and commissioning, a series of feasibility studies must be done to assess the viability of the projects, taking into account all the relevant technical and financial aspects. To produce a comprehensive report on geology, metallurgy, mining, marketing, capital and operating costs, which will be used as a standard to reduce risk and make decisions to either further develop the project or abandon it.

Inadequate financing Mining is a risky business venture and capital intensive. Investors prefer to invest in medium to low-risk projects that offer satisfactory documents containing sufficiently detailed and reliable information that ensure the project will proceed unhindered in accordance with the proposed concept, estimated cost and project profitability defined within acceptable limits.

Investors demand a detailed document of the project: quantitative and qualitative geological report, mining and mineral processing techniques, mine service, infrastructure, technical solution and market research to satisfy their interest that they are investing in a viable project. It’s vital in securing joint venture partnership and debt-financing from commercial banks or gold loans.

Unsuitable mining technique and equipment Selection of suitable and profitable mining methods and equipment depends on various variables including available capital, geographical situation of deposit, geological and strati-graphical conditions, grade, value of minerals, percentage of recovery, price, market value, demand of the commodity, technology, and access to mining equipment.

Ineffective government role The government main role is to provide small-scale mining sector with financial and technical assistance, create cooperative societies that support the sector, improve mining technique and access to equipment, offer access to capital, debt-financing and geological data. All of which were lacking in this project.

The decision of adapting a non-conservative management, deliberate neglect to carry-out exploration works and feasibility studies, inadequate financing, unsuitable mining techniques and equipment by the private entities, and absence of government role are what directly negatively affected the success of the small-scale gold mining project in Gorom.

It is a disappointing outcome considering the amount of time, resources and energy invested in the last three years. A lesson the government, private entities, and investors must learn from and avoid the repetition of the same error through adopting a proper business approach and public administration to the matter.

About the author:

Lupisaly Roman is a mining engineer with experience spanning over ten years. He is currently the Chief Operation Officer for the Juba-based Lilico Engineering Services and Consultancy.

Roman can be reached via Email: lupisaly.roman@lilicoengineering.com